Israeli High-Tech Sector Sees $11.9 Billion Funding Surge in 2025

Israeli high-tech companies have raised an impressive $11.9 billion during the first three quarters of 2025, demonstrating resilience in a sector that continues to thrive despite the ongoing conflict in Gaza. According to Startup Nation Central, this funding marks a 13 percent increase compared to the same period in 2024. The report highlights that while overall funding grew, the number of deals declined by 22 percent to 569 agreements.

The mergers and acquisitions (M&A) landscape has seen remarkable activity, with total transactions reaching a record $71 billion so far in 2025. This figure is nearly five times higher than the corresponding period in 2024, largely driven by significant acquisitions such as Alphabet‘s $32 billion purchase of cybersecurity firm Wiz and Palo Alto Networks‘s $25 billion acquisition of CyberArk.

Tech Sector’s Economic Impact

The technology sector plays a crucial role in Israel’s economy, contributing approximately 20 percent to the country’s gross domestic product (GDP), 15 percent of total jobs, and over 50 percent of exports. In the third quarter of 2025, Israeli tech firms raised $2.4 billion, an increase of 9 percent from the same quarter in 2024, though this figure reflects a significant 50 percent drop from the preceding quarter. The number of deals in this quarter contracted to 141, down by 24 percent from the second quarter and 38 percent year over year.

M&A activity during the third quarter saw nearly $32 billion in transactions, primarily fueled by the significant deal between Palo Alto Networks and CyberArk.

Market Dynamics and Investor Sentiment

Avi Hasson, CEO of Startup Nation Central, described the third quarter of 2025 as a period of transition for the market. He stated, “While funding slowed and investors became more selective, M&A activity reached historic highs.” Hasson noted a trend of fewer funding rounds but at larger sizes, indicating a robust confidence in companies that are prepared for scaling.

He further emphasized that international buyers are making some of the most substantial investments seen in Israeli technology, particularly in the cybersecurity sector. The current trend reflects a growing belief in the potential of Israeli tech firms to navigate challenges while also attracting significant global interest.

The resilience of the Israeli tech sector amid ongoing geopolitical tensions underscores its pivotal role in the broader economy, showcasing the ability of innovative companies to withstand external pressures while driving growth and investment.